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Confused.com ask: Are drivers confused by excess?
Monday, 18 Feb 2008 12:22
Confused.com figures show that the average voluntary excess accepted by drivers is rising steadily. However, although such a practice will lead to less costly premiums, it is important to be mindful of what a larger excess might entail.
An excess payment is the fixed contribution that a driver must pay each time their car is repaired through their car insurance policy, before the insurers begin to pay out on that claim.
If an accident is deemed not to be the insured’s fault, they may recover the excess from the party at fault.
Compulsory excess is the minimum excess payment that an insurance company will accept against a policy. This amount may be affected by a number of factors, such as accident history. Also, the amount will vary from insurance company to insurance company. So the compulsory excess will be higher for younger drivers, or those who are insuring themselves on performance cars, for example.
Voluntary excess is the amount that the insured chooses to pay over and above the compulsory payment. With a larger excess, the financial risk that the insurer undertakes is lessened significantly. As such, volunteering to pay a higher excess will result in a reduced premium.
According to research by comparison website Confused.com, the average voluntary excess accepted by those seeking insurance is rising year on year. The current average falls at just over £140, an increase of around 7.5% on two years previous. This rise could be attributed to increased driver confidence in avoiding claim scenarios, although it might also be due to drivers simply wishing to push down their premiums.
This can be something of a gamble for those seeking insurance however. Although paying lower premiums can certainly be attractive, it is important for the driver to agree a level of excess that they can afford in the event of a claim. So taking out a voluntary excess of £1000 will significantly reduce a premium, but if the insured cannot afford to pay this in the event of an incident, it can prove to be a false economy.
It is also worth bearing in mind that excesses are likely to vary, dependent on factors such as if the claim was for accidental damage or for fire or theft – the excesses for which are usually cheaper. To this end, Confused.com strongly advise insured parties to check policy details before making a claim.